Financial services and policy makers must act now to protect millions against the ‘pension pinch' as life expectancy increases and the pensions gap widens, urges Life Trust Foundation.
The call comes in response to the 2008 longevity research audit from the Oxford Institute of Ageing which reveals half of the UK’s 34 million working population do not currently contribute to a personal pension.
Rt Hon the Lord Hunt of Wirral, chairman of the Life Trust Foundation, warns it is hard for individuals and businesses to take a long-term view in the current economic climate.
“We need to work to make it as easy as possible for people to plan their finances throughout the course of their lives, and to make sure that they avoid getting caught by a ‘pension pinch’ in their later years.”
A 50 year old has a one in four chance of reaching 95 and extra years can be expensive, especially if healthcare provision is needed, says Hunt.
“We are urging the industry to bolster understanding of the impacts of increasing longevity and to improve accessibility to products that can help people financially address the fact that they may live a long life.”
Charlie McCreevy, member of the European Commission, considers more access to affordable products may be part of the solution.
“Tax incentives encouraging people to save more, directed into savings products is the most potent weapon available.”
Mike O’Brien, minister for Pensions Reform, comments: "The State, employers and individuals must all play their part. There is a personal responsibility to save so that people can enjoy the type of retirement they want.”
He believes over 90% of people do not think they could live off the state pension, but only 40% have begun to save effectively. However, the auto-enrolment changes due in 2012 have the potential to drive nine million people into saving more for the first time, he adds.IFAonline
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